Stiglich Construction, Inc. v. Larson

621 N.W.2d 801, 2001 Minn. App. LEXIS 97, 2001 WL 69471
CourtCourt of Appeals of Minnesota
DecidedJanuary 30, 2001
DocketC6-00-1190
StatusPublished
Cited by9 cases

This text of 621 N.W.2d 801 (Stiglich Construction, Inc. v. Larson) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stiglich Construction, Inc. v. Larson, 621 N.W.2d 801, 2001 Minn. App. LEXIS 97, 2001 WL 69471 (Mich. Ct. App. 2001).

Opinion

OPINION

SHUMAKER, Judge

Appellant Stiglich Construction, Inc., brought a mechanic’s lien foreclosure action against respondent Vernet B. Larson, III. The parties arbitrated the contract dispute and appellant then moved the district court to award attorney fees incurred in the arbitration. The district court ruled that appellant waived its right to arbitration attorney fees by failing to request them in the arbitration. Because appellant properly reserved its right to request attorney fees in the district court mechanic’s lien foreclosure, we reverse and remand.

FACTS

General contractor Stiglich Construction, Inc., agreed to build a warehouse addition and to do remodeling and site improvements for Vernet Larson. The parties signed an American Institute of Architects (AIA) standard form contract.

When a dispute over payment arose, Stiglich filed a mechanic’s lien statement; demanded arbitration in accordance with a mandatory arbitration provision in the AIA contract; and started a mechanic’s lien foreclosure action, claiming entitlement to a lien in the amount of $241,218, plus costs and attorney fees.

The parties arbitrated their respective claims and counterclaims and the arbitrator made an award. Stiglich did not ask for attorney fees in the arbitration.

When Stiglich moved the district court for an order confirming the arbitrator’s award and establishing and foreclosing a mechanic’s lien, Stiglich added to the lien claim the attorney fees it incurred for the arbitration. Larson objected to the inclusion of Stiglich’s arbitration attorney fees, contending that Stiglich waived such fees by failing to submit them to the arbitrator. Citing language in the AIA contract, the district court ruled that Stiglich was entitled to attorney fees and costs incurred in the district court but not in the arbitration. Stiglich appeals.

ISSUE

The general contractor and property owner enter a contract that requires arbitration of all claims but allows parties to reserve other rights and remedies. By failing to request an award of attorney fees in the arbitration, did the contractor waive its right to claim such fees during the mechanic’s lien foreclosure action?

ANALYSIS

The premise of the district court’s order is that Stiglich and Larson agreed to arbitrate all claims arising out of or related to the contract. The district court concluded that the attorney fee claim is related to the contract, and, by failing to arbitrate that claim, Stiglich waived its right to obtain attorney fees and costs incurred in the arbitration. Whether or not a party has agreed to arbitrate a particular dispute is a matter of contract interpretation, which this court reviews de novo. Ottman v. Fadden, 575 N.W.2d 593, 595 (Minn.App.1998). A party can be required to arbitrate only those disputes it agreed to submit to arbitration. Id., citing AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986).

There are two provisions of the AIA contract at issue here. The first defines the scope of arbitrable issues:

4.5.1 Controversies or Claims Subject to Arbitration. Any controversy or Claim arising out of or related to the Contract, or the breach thereof, shall be settled by arbitration in accordance with *803 the Construction Industry Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof * * *. 1

The second provision allows parties to reserve rights and remedies otherwise available by law:

18.4.1 Duties and obligations imposed by the Contract Documents and rights and remedies available thereunder shall be in addition to and not a limitation of duties, obligations, rights and remedies otherwise imposed or available by law.

Stiglich contends that it reserved its right under the second provision to seek attorney fees in the lien foreclosure action pending in district court during the arbitration.

In a mechanic’s lien foreclosure action, a prevailing lienor is entitled to “costs and disbursements to be fixed by the court * * *.” Minn.Stat. § 514.14 (1998). As part of the lienor’s costs and disbursements, the court may award a reasonable attorney fee. See Obraske v. Woody, 294 Minn. 105, 108, 199 N.W.2d 429, 431 (1972) (stating that costs and disbursements include an award for attorney fees). The parties’ AIA contract does not specifically provide for an award of attorney fees in the mandatory arbitration.

If we were to read the AIA contract as Larson urges, and as the district court did, we would be giving legal force to the “claims” provision, but we would be ignoring the “reservation of rights” provision. The law requires us to construe a contract as a whole so as to harmonize all provisions, if possible, and to avoid a construction that would render one or more provisions meaningless. Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525-26 (Minn.1990).

We believe that a reasonable construction of the AIA contract, one that harmonizes the provisions at issue, mandates arbitration for contractual claims but allows the contractor to reserve statutory lien rights to secure payment. The right to attorney fees, found only in the statutes, is a component of the statutory rights the contractor may reserve for district court determination.

Other jurisdictions that have examined identical or substantially similar AIA provisions have reached the same result. See, e.g., Stanley Smith & Sons, Inc. v. Dumas, 315 S.C. 30, 431 S.E.2d 595, 596 (1993) (holding that a reservation of rights provision entitled the contractor to seek attorney fees in the statutory enforcement action for both that action and the arbitration); Sentry Eng’g & Const. Inc., v. Mariner’s Cay Dev. Corp., 287 S.C. 346, 338 S.E.2d 631, 636 (S.C.1985) (holding that “where a contract providing for arbitration includes a reservation of rights and the lienor must bring a foreclosure action to enforce an arbitration award * * * ” the lienor may obtain attorney fees for both proceedings).

Although we are not bound by authorities in other jurisdictions, we find persuasive the view of the Oregon court in its construction of provisions identical to those at issue here:

It does not seem the most likely reading of this reservation of rights that it meant to sacrifice attorney fees which the law allows when all the phases of the foreclosure remedy are litigated in court.

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621 N.W.2d 801, 2001 Minn. App. LEXIS 97, 2001 WL 69471, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stiglich-construction-inc-v-larson-minnctapp-2001.